​North Sea oil profit slump threatens projects

North Sea oil and gas projects face the chop because of a slump in profits after the global oil price dropped, the 22nd Oil and Gas Survey says.

Carried out by the
Aberdeen and Grampian Chamber of Commerce and lawyers Bond
Dickinson, the report says 70 percent of North Sea firms have
seen their value drop over the last year.

The global price of oil hit record lows earlier this year,
falling below $50 per barrel before rallying moderately.

Confidence is at an “all time low,” the survey published
on Thursday asserts.

Uisdean Vass from the Bond Dickinson oil and gas team told the
Guardian: “The UK oil and gas sector is going through a
regulatory and fiscal transition at blistering pace and companies
in the sector are understandably increasingly concerned about how
they will be affected.

“Decommissioning is the bittersweet positive in the survey.
Academics have been predicting an imminent spike in
decommissioning for years, but that spike is now well and truly
upon us.

“Decommissioning is not driven by oil price or demand and
could be very important in maintaining the value of activity in
the North Sea. But the inevitable downside is that it hastens the
decline of offshore exploration and production.”

In March, it was announced that oil giant Royal Dutch Shell would
cut at least 250 jobs and increase workers’ hours at its North
Sea operations following a drastic drop in the price of oil.

Of the 2,400 staff and agency contractors currently working in
the North Sea, around 10 percent will be fired. The job cuts are
in addition to 250 redundancies announced in August, before the
oil price started to drop.

The story for those at the top of the North Sea oil industry is
rather different.

In April, campaigners in the UK labeled BP chief executive Bob
Dudley’s pension scheme “excessive” after it was
revealed the chief had pocketed £1.7 million in pension benefits
in 2014.

Dudley’s award is roughly 10 times the average pension payment
received by a FTSE 100 director and 62 times the average annual
salary in the UK.

News of his benefit prompted hostility after BP posted a 10
percent fall in profits in February.

The oil giant also announced it would cut 200 full-time onshore
jobs and 100 contractor roles from its North Sea workforce.